What I’m reading #24: Investing superpowers & sleep

Yesterday I attended a conference call with Dr. Moira Somers.

Neuropsychologist, professor and epic author.

In her book, ‘Advice that Sticks’, she says:

“When life changes, money changes and when money changes, life changes.”

Life and money are intertwined.

This inspired my latest weekend reading.

Dr. Somers talked about major life transitions.

How can we all be better help when life packs a wallop?

Transitions can be anticipated or unexpected, welcomed or feared, voluntary or forced.

They often involve fundamental shifts in self-identity and in social roles.

Sudden wealth creation, marriage/divorce, a house purchase, diagnosis of serious illness, widowhood, selling a business, retirement and children leaving home all have significant financial implications.

But, it’s entirely possible the individuals involved may not be at their cognitive best for receiving and acting on guidance or advice.

The emotional energy all these require can leave individuals tired and error prone.

This mental depletion risks non-adherence to advice that as a professional we know can help and it was fascinating to hear her ideas on an entire range of potential antidotes.

Talking about energy depletion, the call was in the middle of the night and I had only just read in The Atlantic about going to bed early.

One recent study of more than 30,000 UK residents found that people who increased their quantity of sleep over a four-year period got about the same happiness benefits as they would have from eight weeks of therapy, or from winning up to $280,000 in a lottery.

Well-rested people are more social and have more positive emotional experiences with co-workers and romantic partners.

In this “always on” culture – are you really getting enough rest?

I read this piece on the ultimate superpower in investing, which Charlie Bilello says is being good at suffering.

To reap the largest rewards, facing a high degree of pain is unavoidable.

When thinking about big winners in the stock market, excruciating pain probably isn’t the first thing that comes to mind.

People tend to focus instead on the final outcome (eye-popping long-term gains), ignoring the tremendous fortitude (holding through large drawdowns) and faith (believing it will come back) required to achieve that outcome.

This week, Carl Richards wrote about overcoming envy.

He opens with a story of a Wall Street trader who was angry about his $3.6 million bonus because it wasn’t big enough.

While it’s easy to scoff at this guy’s remarks – aren’t we all guilty of comparing ourselves to others?

The story ends on a surprising note.

The trader realised his envy was hurting him so he left his job (and seven-figure bonuses) to discover what truly makes him happy. A riveting read.

If, like this Wall Street trader, you’re also on a journey of self-discovery. Or, wondering what your next transition or project will be, Warren Buffett believes three choices in life separate the winners from losers.

These are:

1. Build up your knowledge one day at a time
2. Don’t compromise your integrity
3. Measure your success by Buffett’s “ultimate test”

One of the biggest problems in personal finance is deciding when to invest a sum of money.

It is almost always better to invest it now, even on a risk-adjusted basis.

This is true across asset classes, time periods, and nearly all valuation regimes.

Nick Maggiuilli explains more in his article – and also answers the questions you’re almost certainly itching to ask.

Long-term thinking is easier to believe in than accomplish. Most people know it’s the right strategy in investing, careers, relationships – anything that compounds.

Long term is harder than most people imagine, which is why it’s more lucrative than many people assume.

Everything worthwhile has a price, and the prices aren’t always obvious. To do long term effectively you have to come to terms with a few points.

1. The long run is just a collection of short runs you have to put up with
2. Your belief in the long run isn’t enough, your investors, coworkers, spouses, and friends have to sign up for the ride
3. Patience is often stubbornness in disguise
4. It’s hard to know how you’ll react to a decline
5. Long term is less about time horizon and more about flexibility

And finally…

However you define success, encourage young people to embrace things that speak to their interests and things that help them learn how the world works. More life-changing advice here.

A question for you:

How is your relationship with money impacting your quality of life?

This week’s mediations:

“More effort is wasted doing things that don’t matter than is wasted doing things inefficiently. Elimination is the highest form of optimization.”
 – James Clear

“If we see someone throwing money away, we call that person crazy. Money has value. Wasting it seems nuts. And yet we see others – and ourselves – throw away something far more valuable every day: Time.”
– The Shortness of Time, Farnam Street

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Have a great weekend and enjoy the ‘light’ reading! 

Arthur C. Brooks on ‘The Lie We Tell Ourselves About Going to Bed Early‘

Charlie Bilello’s ‘The Ultimate Superpower in Investing‘

Carl Richards’ ‘Overcoming envy‘

Marcel Schwantes for Inc. ‘Warren Buffett Believes 3 Choices in Life Separate Winners From Losers‘

Nick Maggiulli’s ‘Dollar Cost Averaging vs. Lump Sum: The Definitive Guide‘

Morgan Housel on ‘How To Do Long Term‘

Bill Murphy Jr. for Inc. ‘Want to Raise Successful Kids? Warren Buffett Shared These 5 Words of Advice‘